Focus On 17 September 2017

Indonesia, the time is right

The largest economy in Southeast Asia is leaving the negative commodities cycle behind it. President Widodo’s government is implementing free-market measures and reforms, presenting the country as a symbol of political stability and economic dynamism and attracting foreign investors. The direction taken leads us believe that this is right time for Italian companies wishing to export products to Indonesia, invest, or participate in the development of the country with on-site operations, taking advantage of the many projects planned by the government.

The largest economy in Southeast Asia is leaving the negative commodities cycle behind it. President Widodo’s government is implementing free-market measures and reforms, presenting the country as a symbol of political stability and economic dynamism and attracting foreign investors. The direction taken leads us believe that this is right time for Italian companies wishing to export products to Indonesia, invest, or participate in the development of the country with on-site operations, taking advantage of the many projects planned by the government. 

 

There are many opportunities in the infrastructure sector, which requires “…US$500 billion in investments over the next five years” according to Jim Yong Kim, President of the World Bank. Roads, ports and airports as well as energy production and distribution from both traditional and renewable sources. Digital infrastructure is also needed, important for the development of an internal market for placing goods and making production processes more efficient.

 

Greater efficiency and increased productivity also involve technology imports from abroad, industry machinery in particular. This would play a crucial role in the mining industry and related sectors, given the government’s wish to develop a local processing industry for extracted minerals as well as the manufacturing and agricultural sectors, which still rely on outdated techniques.

 

Close to 60% of Indonesian GDP is made up of domestic consumption and the urbanisation process will result in 70% of the population living in urban centres by 2030, the same year the consumer class is expected to reach 140 million people, the largest in Southeast Asia. The automotive industry could be strategic both in terms of a target market and direct investment on-site, since most produce is destined for the domestic market.

 

Italy is beginning to understand the importance of Indonesia, including it among the target countries identified by the “Control Room”. SACE-SIMEST included the country among the 15 priority geographies for Made in Italy products, offering direct support through credit risk hedging for deferred payment or protection of on-site investments, and indirect support through guarantees on loans granted to local importers. This “push strategy” intends to encourage Indonesian importers to choose Italy as a supply market, offering financial packages that make transactions with Italian exporters competitive. 

 

For the full study download the pdf >>

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Various 07 October 2019
Interview with Alessandro Terzulli, Chief Economist at SACE.
Focus On 17 November 2017
In recent years, protectionism has become fashionable once again. More than 8 thousand discriminatory measures were introduced globally between November 2008 and June 2017. The most damaged sectors include automotive, metallurgy and instrumental mechanics: these segments account for almost 40% of Italian exports.